DEAR BOB: Over 18 months ago, my husband and I bought two acres for $44,900. Our plan was to build our home on this land and sell our primary residence. But my husband recently died. Because I had no intention of building a new home without my husband, I sold the land for $138,200 net. Now I am in the process of refinancing my primary residence to make the mortgage payments more manageable. I will pay $92,000 at the loan closing to bring my mortgage balance down. Will I have to pay capital gains tax? If so, how much? – Paula W.
DEAR PAULA: Please don’t do anything until you consult your personal tax adviser about the capital gains tax on your very profitable land sale.
Purchase Bob Bruss reports online.
Depending on how title to that land was held, you received a partial or full new “stepped-up basis” to market value on the date of your husband’s death. That stepped-up basis will greatly reduce your capital gain tax on the land sale.
Currently, the maximum federal capital gain tax is 15 percent. Depending on what state the land is located in, you will probably also owe state capital gain tax, too.
After you know your exact capital gains tax situation, then you can decide if you want to use the leftover cash to reduce the balance on your home’s refinanced mortgage.
NO WAY TO STOP CO-OWNER FROM SIGNING A QUIT CLAIM DEED
DEAR BOB: My wife and I hold joint title to our home. She recently said she wants her name off the title. As far as I know, our marriage is fine. We have two wonderful kids. When I pressed, she said she just wants her name off the title to our home. If she carries this out, is there anything I can do to stop it? – Fred R.
DEAR FRED: Maybe I missed something in your letter, but to whom does she plan on conveying her half of the house?
The normal way of conveying a partial title interest would be a quit claim deed. I don’t know any way you can stop a co-owner from signing a quit claim deed.
The result could be you might wind up owning half of the home with a stranger. Of course, if she signs a quit claim deed to you, then you would own 100 percent of the title.
The only exception I can think of would be if you and your wife hold title as tenants by the entireties. This is a special version of joint tenancy with survivorship between husband and wife where the signatures of both spouses are required to convey valid title. For full details, please consult a local real estate attorney.
SOCIAL SECURITY DEATH INDEX CAN BE HELPFUL
DEAR BOB: As a divorce lawyer, I shared your concern that the lady who still held title with her ex-husband who might be deceased should have received the property title as specified in her divorce settlement. I agree the divorce lawyer should have taken care of the title transfer at the time of the divorce. As for learning if her ex-husband is now dead or alive, she can find out by going to the Social Security Death Index, which is free on the Internet. I hope this helps, as she already has enough problems – Mary T.
DEAR MARY: Thank you for that valuable information. I was not aware there is a Social Security Death Index.
The new Robert Bruss special report, “The 10 Key Questions Condo Sellers Hope Their Buyers Don’t Ask,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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